Update: We reported in July on the rise of two San Francisco ridesharing startups, Lyft and SideCar. Both companies have since expanded their reach in the Bay Area, and have yet to run into any thorny legal issues so far. These ride-sharing companies claim that they are not taxi companies, even though they act very similar to taxi companies. The pair is serving a much smaller area than Uber, a smartphone-powered black-car service focusing on the upper tier of the market.

Uber, which also operates in San Francisco, has been facing increasing legal scrutiny in cities around the country. Last week, Washington, DC, again proposed new anti-Uber regulations, this time banning car firms with less than 20 cars in their fleet. Recently, though, the company beat back a state-issued cease-and-desist order in Massachusetts to successfully launch in Boston. Uber—which still operates in San Francisco—remains under investigation by the California Public Utilities Commission, the state agency that regulates limousines. As Lyft and SideCar expand in the City by the Bay, they may end up facing similar legal challenges.

SAN FRANCISCO—As I drove over the Bay Bridge and passed into the city on a recent Friday afternoon, I faced a crisis of will. Was I truly willing to attach a hot pink Carstache—which is precisely what it sounds like—to the grill of my black Toyota in the name of journalism?

I pulled onto Harrison Street, into a section of the SoMa (South of Market, San Francisco’s startup hub) district that's full of new high-rise residential buildings. I stepped out into the summer afternoon, opened my trunk, and whipped out the ridiculously large but definitely distinctive Carstache. I walked to the front of my car and did the deed. Carstache affixed. Now I was set to begin my first work shift.

Last week, I completed my orientation and training as a driver for Lyft. It's the new service from Zimride, a ride-sharing website started back in 2007. Lyft launched in limited form back in late May. Its goal? To connect drivers and passengers through the company’s free iPhone app. In essence, it’s a social, tech-driven way to compete with taxis (notoriously difficult to find in San Francisco). Think AirBnB—another local startup that lets people worldwide rent out their extra rooms, apartments, homes, teepees, and yurts—but for cars.

Lyft isn’t the only company offering this type of service; the similar SideCar just launched in June. So over the last two weeks, I became a registered driver on both sites. And I'm one of the first. I’m fairly certain at the time of this article, I’m one of the first 50 drivers on Lyft and one of the first 100 drivers on SideCar. In effect, I’ve begun moonlighting as a very part-time not-quite-taxi driver.

With Carstache in place, I spent 90 minutes tooling around various neighborhoods. Mission District, Potrero Hill, North Beach, the Financial District—all without seeing a single request (and worrying often that the Carstache might fall off). Finally I got the first signal. My first pickup was only five minutes away. As soon as I accepted the mission, I rolled from the Financial District back down into SoMa to pick up a guy named Matt. In his user icon, he appeared to be hugging an original Macintosh. Matt also had a perfect 5.0 customer rating. I liked him already.

I rolled up sportin’ the ‘stache and parked for a minute in front of his building. When Matt came down, I greeted him with the traditional Lyft greeting (I've been trained on this!): a fist-bump.

I invited Matt to sit up front and adjust the music as he liked. After all, I've been told to treat him just as I would any other friend riding with me. I even invited Matt to use the extra USB jack to charge his iPhone—Lyft provided one for me and the passenger to juice up during the ride.

With Lyft, the passenger tells me where he or she wants to go (maximum 60 mile radius). When the ride ends, the Lyft app provides a “suggested donation”—about 20 percent lower than what a cab would charge for the same fare.

“Where we headed?” I asked Matt.

“SFO,” he said.

“We can do that,” I responded cheerfully, remembering the training mantra that Lyfters should smile a lot. I pulled away from the curb.

Matt worked for Path and was on his way to Las Vegas for a friend’s bachelor party. I looked him up later and learned that he was Matt Van Horn, who had helped found Zimride, Lyft’s parent company. Later, by e-mail, he elaborated on his connection to the company, he's “a shareholder, power user of Lyft, and friend of the company." He was happy to describe his previous 30 ride experiences too.

“All have been positive,” he wrote. “Everyone has been really accommodating, kind, and fun. I had one driver who picked me up from my apartment to take me to a haircut, then asked if I wanted him to stay in the area in case I wanted a ride to work after. After my 10 minute haircut, I already had a Lyft ready to take me to work and it literally took 20 minutes out of my day instead of the usual hour it takes for a haircut.”

Once I dropped Matt off, I gave him a 5-star rating and hoped that he’d do the same for me.

My first experience proved fairly typical. After a few hours on duty, you quickly realize two things: 1) the hotspot pickup area is near downtown in the late afternoon and 2) the pink Carstache definitely gets attention.

“I’ll be parked somewhere and then ten people will walk by and say, ‘Whoa, look at that pink mustache,’” Nancy Tcheou, 25, a fellow Lyft driver, told me last Monday by phone. “I’ve had at least three people take a picture of it while I was parked, in the car. It’s been really entertaining.”

"If it walks like a duck..."

Using the SideCar app

The Bay Area is no stranger to innovations in transportation. For decades now, the “casual carpool” system has offered an inexpensive way for East Bay passengers to get to San Francisco. It saves everyone time and money (no one will complain about paying less for the westbound bridge toll). For over a decade, the city has also had official carsharing companies and non-profits operating within its 49 square miles. This fall, San Francisco is even expected to launch a bike-sharing service.

San Francisco has a burgeoning tech-transportation scene, too. Just last year, the company Getaround launched; allowing individuals to turn their personal vehicles into car-shares. Established companies like Cabulous and Uber recently announced an expansion of their consumer offerings in San Francisco, too.

Yet despite the various transport options, San Francisco has less-than-stellar taxi service. I live in Oakland and never take taxis, but this is what people, online and offline, tell me.

Both Lyft and SideCar have the potential to shake up the local transportation industry further, but only if their business is acceptable to the powers that be. Sure, it's neat to catch a ride from another tech-savvy human rather than from an anonymous taxi driver who might be more interested in blabbing away on his phone than in catering to you. But lawyers and city officials say that both companies might be in conflict with local taxi law.

Lyft and SideCar both insist, however, they are simply ride-sharing companies, not taxis operators. In essence, I drove around like a taxi and dropped people off like a taxi, but both companies say that I’m definitely not a taxi. I’m not getting paid for fares; I'm getting a voluntary “donation.” (Of course, low customer ratings received after underpaying too often would probably result in a rider not getting rides in future).

“Passenger agrees that Passenger shall solely use SideCar for personal, ride-sharing purposes only, and shall not use SideCar for any commercial purposes. Use of SideCar ride-sharing for any commercial purposes (as determined by SideCar in its sole and absolute judgment) shall result in immediate termination of Passenger’s account. Passenger expressly acknowledges that SideCar is solely a ride-sharing marketplace, and not a common carrier, limousine or taxicab service, or travel agent.”

I ran the idea past the former deputy director of the San Francisco Taxi Commission, Jordanna Thigpen. Despite what the companies say in their own legal documents, the judicial system may have its own view.

“Sometimes in the law, judges will interpret a statute [in this way]: if it looks like a duck, if it walks like a duck, it’s a duck,” said Thigpen, now an attorney with Cotchett, Pitre, and McCarthy.

In her former position as enforcement and legal affairs manager for the taxi division of the San Francisco Municipal Transportation Authority, Thigpen said that she would focus largely on safety. She frequently checked (among other things) not just that the vehicle in question had insurance at the time of inspection, but that there was continuous coverage—as the law requires of taxi companies.

“[Lyft and SideCar] are trying to put themselves in this netherworld of regulation,” Thigpen said. “The determination is: how is a court going to interpret the definition of ‘for hire’ vehicle?” For now, company representatives insist they are not a "vehicle for hire."

"We’ve worked with transportation legal experts who confirm we are abiding by current laws," said John Zimmer, the founder of Zimride, in an e-mail sent to Ars. "Lyft is a community based ride-sharing service that is an extension of our existing long distance ride-share model. We use optional donations as a way for drivers to reimburse the costs associated with owning and operating a vehicle."

116 Reader Comments

A little off topic, but Straight Talk is pretty cool. When I was recently in the US I used Straight Talk as it was the best/only deal I found that gave me data on an iPhone compatible network with no ongoing contract. I had the odd reception issue, but I presume this was just the AT&T network rather than something specific to Straight Talk.

If you have to work a certain number of hours ("With Lyft, I had to agree to work certain hours.") and you go wherever the passenger wants ("With Lyft, I don’t know where I’m driving until a passenger steps into the car.") then I don't see how this can be considered anything but a taxi service. Ridesharing implies you would be going anyway, and the passenger is sharing the trip. If the trip is all about the passenger and you are going only to get a "donation", that's a taxi in my book.

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount. The insurance requirement is also there to protect the passenger. This has a fun, easy-going feel, but I'm not sure that should really trump safety and fraud prevention. Not to mention preventing various forms of discrimination (whether not picking up certain people, or not providing services to certain areas e.g. black neighborhoods).

The counterargument is that regulation also serves to maintain rates at a certain level, and that may not be good for consumers. But I don't think this is the best solution, especially given that part of why they are undercutting the competition is by cutting corners on licensing, vehicle maintenance, and employee pay and benefits (since basically they are getting a large number of part-timers to do the work).

Last point, undercut taxi services this way, who is going to provide taxi services in the middle of the night? Is Lyft going to get volunteers for those shifts too?

This is a neat idea. I'm interested to see how these services navigate the legal areas.

I'd like to see something geared more towards occasional ride-sharers, as opposed to a more casual taxi service. The vast majority of moving cars have one person in them, and that just seems silly. I'm one of a small percentage of idiots with a car in NYC, and I would certainly not mind giving strangers rides during the rare times that I'm driving somewhere. The requirement for a four-door vehicle (for both Lyft and SideCar) seems unnecessary, and it would also make it impossible for me.

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount.

I'd have to agree with this, and jdale's post in general. Taxis are expensive, sure, and part of that expense is due to regulation. That doesn't mean regulation is a bad thing.

I rather suspect this will be like Prosper. Giddy feel-good beginning, but it'll grow more and more akin to established business models (in this case, taxi services) over time, until it essentially is a taxi service for consumers.

It's a duck, but a pretty cool duck. Too bad regulation stands to stifle innovation here. It would be nice if there wasn't a clear bias from the powers that be. Sounds like there is clearly a demand for something like this (or at least more taxis). What has so far stood in the way of meeting this demand from traditional sources I wonder? Wonder if the taxi companies ever considered a phone app based method for "hailing" the taxi? Is there any competition in the traditional taxi market or is it regulated into the ground?

I considered creating a less formal (and free) car-sharing website years ago, just as a hobbyist project, but was advised that I would need to take out liability insurance to do so. If anyone using the site was involved in an accident causing injury, I could potentially be considered partially liable, and be forced to pay up.

No matter how many disclaimers I put up on the site, if there was a particularly nasty lawyer pursuing damages, there was the potential for huge costs in the case of an accident.

This advice was based on Australian law, but I doubt the situation would be any different in the US.

That advice basically put an end to the plan.

Liability insurance isn't cheap. These guys would have to be earning a pretty decent income from the service to just cover the insurance costs. If that is the case, it's hard to argue that they're not a transport company.

In the UK (or at least in London) there are two kinds of legal cab service - the famous black cabs, and minicabs. Minicabs can be just about any kind of vehicle, usually without a meter, and must be pre-booked at an agreed upon rate. You can't hail them on the street like a black cab. This sounds very much like an effort to bring the minicab business model to America. Hopefully it works.

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount. The insurance requirement is also there to protect the passenger. This has a fun, easy-going feel, but I'm not sure that should really trump safety and fraud prevention.

Government simply has no compelling justification to use force (the threat of fines and/or imprisonment) to prevent an adult from contracting with another adult to do something which would otherwise be legal were money not involved. There are always well-intentioned excuses for such government intrusion on basic rights, such as fraud prevention--but fraud is already illegal, such laws already serve as a reasonable enough deterrent to prevent most of it, and the voluntary rating and reputation systems which "ride-sharing" communities use are excellent and less-intrusive ways to be proactive with the same issues professional licensing has traditionally tackled.

There can even be professional organizations which offer voluntary licensing, inspections, etc., to which companies or individuals could choose to submit for the purpose of gaining a recognized accreditation. Government need not mandate it; the market would provide for such a thing because some customers would find it an added value.

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Not to mention preventing various forms of discrimination (whether not picking up certain people, or not providing services to certain areas e.g. black neighborhoods).

The idea that no one would ever serve minority communities if not for government mandates requiring it is a strangely common fixation, and a very mistaken one. Many of the reasons why this is the case are tackled in this nice little article:

Even in then worst of times, when minority communities were pervasively discriminated against and systematically underserved, free markets allowed them to develop ways to serve themselves--e.g., Motown records, and the many Jewish institutions which developed and were at the cutting edge of economics, politics, and technology for centuries because of discrimination against them. When government decides to get involved, however, it's more often to do harm rather than good--for example "separate but equal" Jim Crow laws which worsened and codified what had been informal discrimination into formal law.

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The counterargument is that regulation also serves to maintain rates at a certain level, and that may not be good for consumers. But I don't think this is the best solution, especially given that part of why they are undercutting the competition is by cutting corners on licensing, vehicle maintenance, and employee pay and benefits (since basically they are getting a large number of part-timers to do the work).

It's not a legitimate role of government to create artificial scarcities and barriers to entry, even if the goal is artificially increasing wages and benefits--because government can only do so by violating one party's basic rights in order to enrich another party. That's bad enough, but then government licensing mandates for things as basic as sharing transportation or the like always lag behind the times when disruptive technologies develop and prop up old, inefficient industries at a great cost to their forced-to-keep-using-them customers.

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Last point, undercut taxi services this way, who is going to provide taxi services in the middle of the night? Is Lyft going to get volunteers for those shifts too?

There will always be a need for actual taxi and/or similar professional services for just this reason. We'd just need fewer of them overall, and they'd specialize in these high-demand times. The market adjusts to serve whatever conditions in which it finds itself--that's one of the advantages of having a free market: it's flexible to changing circumstances.

I can sort of understand a ride share type of system. That would make your car cheaper and get more people into fewer cars. Win/win.

These systems had the driver/author driving around without a fare for 90 minutes, then making $20 for another 90 minutes. Gas, insurance, and parking are all expensive in NY or San Fran, I can't see that as being anything but a loss.

Edit: oh, and I visited Brooklyn a little while back for the first time and had two cabs say that they didn't know where we were trying to go. Sounds like it's part of the game there already to try to avoid taking your cab to an area that would be harder to pick up another fare. Pretty much had to go for a hired car while I was there.

In the UK (or at least in London) there are two kinds of legal cab service - the famous black cabs, and minicabs. Minicabs can be just about any kind of vehicle, usually without a meter, and must be pre-booked at an agreed upon rate. You can't hail them on the street like a black cab. This sounds very much like an effort to bring the minicab business model to America. Hopefully it works.

That's my take as well. Rates are pre-determined by distance traveled prior to pick up with pick up and destination agreed upon before dispatch. The Black Cab/Medallion system of managing taxis has been regulated into the ground and has completely stifled competition. Something like this would be a great way to for the industry to innovate.

Here in Austin the cab companies fought tooth and nail against expanding where pedi-cabs could operate.

Seems like a great way for sex offenders to get people in their car. Especially if other competing services start springing up with less stringent interviews and procedures.

@Cyrus - What vetting and other safety measures, if any, are there during the training and recruitment of staff?

Oh my god, not sex offenders! Shut down everything!

Both Lyft and Sidecar purport to do background checks on potential drivers. Any registered sex offender will show up on even a casual investigation. There's a readily accessible database that has all of them in the system. If the sex offender is not registered then there's no way to know if he or she is your driver, or the cashier at your Wal-Mart, or working as an account or...really, who the hell cares? Are we really that afraid of these people that this needs to be cause for concern. Are there that many sex offenders out there?

Hint: as a member of law enforcement who regularly has to check the offender registry and works closely with the sex offender registration team the answer to that last question is no, no there is not.

In Lima, Peru, every car is a taxi of opportunity, aside from the "seguro" taxis that are registered. You can't walk around there and look like you might not be a local without dozens of cars honking the horn and waving a little cardboard "taxi" sign at you - coincidentally it's often pink. Sometimes it works well, you get driven in a dilapidated Toyota to where you want to go and don't pay much - what you do pay is agreed in advance because there are no meters. Sometimes the gun comes out and you get driven to an ATM to withdraw your limit before being left somewhere you don't want to be minus anything valuable you were carrying.

This is why there is regulation and even though San Francisco isn't quite so dangerous I don't like either company's chances of being allowed to proceed without it. City authorities make money from this kind of thing, no way will they forego their cut on the technicality of "donation" vs. fare.

All the regulation exists on the taxi industry simply because of all the issues these sort of gimmick setups are going to run into.

They rely on the actual regulated taxi companies to take the bulk of the people and coverage, while they mess about on the fringes, and people praise them because they are cheaper.

Then a passenger dies because the car they were driving in was unsafe, because it hasn't been safety inspected regularly like the regulated taxis are, and the lawsuits start. That and another million reasons is why this sort of thing is a bad idea.

Seems like a great way for sex offenders to get people in their car. Especially if other competing services start springing up with less stringent interviews and procedures.

@Cyrus - What vetting and other safety measures, if any, are there during the training and recruitment of staff?

Oh my god, not sex offenders! Shut down everything!

It's a genuine question, there's really no need to mock. Unlicensed unregulated taxis and drivers are a pretty bad idea. In the UK and other countries, rapists have used unlicensed taxis as a way of picking up victims.

If Lyft and Sidecar prove popular, you can bet more companies will be in on the action with more corners cut as they try to be cheaper.

Regulation is sensible and, in so far as is possible, protects the customer.

Last week, I completed my orientation and training as a driver for Lyft. It's the new service from Zimride, a ride-sharing website started back in 2007. Lyft launched in limited form back in late May. Its goal? To connect drivers and passengers through the company’s free iPhone app. In essence, it’s a social, tech-driven way to compete with taxis (notoriously difficult to find in San Francisco). Think AirBnB—another local startup that lets people worldwide rent out their extra rooms, apartments, homes, teepees, and yurts—but for cars.

In theory these types of businesses are great - but in practice - where's the checks and balances to ensure that nothing nefarious takes advantage of the situations.

I can see a single incident dampening any one of these business models.

Seems like a great way for sex offenders to get people in their car. Especially if other competing services start springing up with less stringent interviews and procedures.

We really have raised a generation in irrational fear--unaware of how statistically safe the real world actually is--if this is the sort of thing people worry about when they hear about ride-sharing services. Adults should be free to use their own best judgment, as cautious or as carefree as they choose to be. Moreover, there are much easier and less clearly traceable methods of finding people to molest than advertising yourself online and molesting someone in a vehicle trackable back to you. Candy can be used to lure young children in for molestation, yet we don't ban or license candy.

RyanS wrote:

Then a passenger dies because the car they were driving in was unsafe, because it hasn't been safety inspected regularly like the regulated taxis are, and the lawsuits start. That and another million reasons is why this sort of thing is a bad idea.

Only if one thinks the government is mommy and daddy, there to protect its citizen-children from the big bad world because they're too foolish to be able to make their own choices and take their own risks--a premise many find condescending and dangerous. People must be allowed to make their own choices, whether good or bad, whether safe or risky--or we really will have a society of adult-children incapable of making basic decisions and weighing potential choices for themselves (if we don't already). Is government-as-parental-authority directing our lives really the best path for our society, or should we prefer a government-as-referee model where it only steps in to mediate when absolutely necessary?

sonolumi wrote:

It's a genuine question, there's really no need to mock. Unlicensed unregulated taxis and drivers are a pretty bad idea. In the UK and other countries, rapists have used unlicensed taxis as a way of picking up victims.

And again, sex offenders have used many things to pick up victims; that's not a valid reason in and of itself to ban or license them. We don't license candy and toy purchases, or computer purchases for that matter, though paedophiles could use them to entice children. We don't ban alcohol even though it's commonly used as a tool by would-be rapists.

And sex offenders are not known to play by the rules anyway, so the whole issue is moot; they've sometimes been known to use fake badges and even whole fake uniforms to impersonate police officers as a way of picking up victims, and impersonating a licensed taxi driver would surely be easier.

This whole line of thought--that just because something can be used by bad people, means there's justification for regulating or banning it--is well-intentioned but very ill-conceived. Anything can be used for good or ill; there must be some further justification beyond that for regulation or bans.

Only if one thinks the government is mommy and daddy, there to protect its citizen-children from the big bad world because they're too foolish to be able to make their own choices and take their own risks--a premise many find condescending and dangerous. People must be allowed to make their own choices, whether good or bad, whether safe or risky--or we really will have a society of adult-children incapable of making basic decisions and weighing potential choices for themselves (if we don't already). Is government-as-parental-authority directing our lives really the best path for our society, or should we prefer a government-as-referee model where it only steps in to mediate when absolutely necessary?

Yeah, you'd really keep this laughable attitude when your friend or family member dies to some jerkoff trying to earn some extra cash by running around picking up people in his brakeless, bald tyred un-inspected shitbox.

Interesting story and yes I think they'll fail the duck test. Ether one of two things will happen. These companies become like the competition, or the rules and regulations of being a transportation company change. Somewhere between the two is the most useful outcome.

SergeiEsenin, have you ever been out of the US ?The bizarre unregulated world you talk about, exists in most third-world countries. How great do you think life is in those places ? Hint : it's most definitely not great.What's with the anti-regulation spiel ? Most of us living in the western world rather like the quality of life - we don't want to go backwards...

The end of this will be when one of the drivers gets into an accident, and their insurance refuses to cover them, because they declared their car to be for personal use only. Donation or not, once cash changes hands, guess what, it's commerce. Otherwise prostitutes would start working for donations, and never spend time in jail.

Only if one thinks the government is mommy and daddy, there to protect its citizen-children from the big bad world because they're too foolish to be able to make their own choices and take their own risks--a premise many find condescending and dangerous. People must be allowed to make their own choices, whether good or bad, whether safe or risky--or we really will have a society of adult-children incapable of making basic decisions and weighing potential choices for themselves (if we don't already). Is government-as-parental-authority directing our lives really the best path for our society, or should we prefer a government-as-referee model where it only steps in to mediate when absolutely necessary?

Yeah, you'd really keep this laughable attitude when your friend or family member dies to some jerkoff trying to earn some extra cash by running around picking up people in his brakeless, bald tyred un-inspected shitbox.

People die every day from numerous kinds of accidents, from negligences, and from crimes of every type; yet, we still leave our houses. Life is about learning to mediate risks and rewards in an educated and productive way, not about wrapping ourselves in metaphorical bubblewrap and begging to be protected from freedom of choice. I expect the government to punish anyone who violates the freedoms of another person--not to proactively strip people of their freedoms for fear that they might hurt themselves with bad choices. We need to frankly grow back up as a society and culture, because we've become infantilized over the last few decades. Regulations on things which are inherently dangerous to other people are understandable; regulations on things which are only dangerous when misused (isn't everything?), and/or are only dangerous to ourselves, are unjustifiable. The legitimate purpose of government is to protect individual rights, not to strip them away.

Have you ever read the Federalist Papers, or the personal letters of Jefferson? Not infrequently, so did the founders of the U.S., and yet they set up a pretty successful and mature system. I suppose even Nobel Prize winning economist Milton Friedman and other free-market champions might sound similarly extreme to the sort of people educated to believe in statist paternalism rather than in freedom of choice. But such paternalism is irrational on its face if one actually values individual rights...

I have one straightforward libertarian principle by which I judge the necessity and wisdom of any given law or regulation:

The right of any individual to be left alone can only be interfered with when it directly interferes with the right of any other individual to be left alone, and any such interference must be minimally invasive.

We'd have a far better society and government if similar principles were in play.

Nom wrote:

SergeiEsenin, have you ever been out of the US ?The bizarre unregulated world you talk about, exists in most third-world countries. How great do you think life is in those places ? Hint : it's most definitely not great.What's with the anti-regulation spiel ? Most of us living in the western world rather like the quality of life - we don't want to go backwards...

No one reasonable wants a completely unregulated world. It's desirable however to have a rational framework to determine when regulations are called for, rather than allowing random and unjustified regulations to spring into existence anywhere and everywhere. Regulations are great tools when they're necessary--which again, is when the regulated items, services, or industries are inherently dangerous to other people. There's simply no rational purpose for regulating something which isn't inherently dangerous, or is only dangerous to an individual who makes the choice to use (or misuse) it.

What's more, the Western world and its high quality of life would never have developed had today's restrictive thickets of regulation existed so pervasively in previous centuries. It's when industries are new, disruptive, and less regulated that they have the power to advance rapidly. Imagine a past where the cotton gin was regulated out of use because it's less thorough and more environmentally-unfriendly than hand-picking, or where the automobile was regulated to the point of remaining a niche-product because it takes work from coach-drivers and stables (essentially the same argument was made above about how ride-sharing should be regulated away because it displaces taxi drivers), or where the Internet was regulated early on to the point of requiring an "online license" of all users because it can be used by sex offenders (as with another argument made above), etc. Regulation without legitimate and pressing justification is an inherent negative.

Do we really want to continue to develop in the direction of pervasive regulation and paternalism, or to move back towards the referee model I mentioned above? Already the quantity and pervasiveness of regulation in our society is extreme.

I'm seconding Cheese2's point - here in the UK, pretty much every town or city has both taxis (Hackney Carriages in the official jargon) which can pick up passengers on the street, and cheaper minicabs (Private Hire Cars) which have to be pre-booked. Both kinds of cab are now regulated by local authorities - ensuring that drivers have appropriate insurance, that their vehicles are properly maintained, and that the drivers themselves are well-behaved. The minicab services started by exploiting a loophole in the law, and the traditional taxis fought against them being recognised by the city authorities, but now both forms of cab are recognised as being equally useful.

There's lots of innovation coming out of the cab industry here, too - apps like Hailo (www.hailocab.com) and Kabbee.com let you order a taxi or minicab from a smartphone - and we've had services like ComCab that have let you pay for a taxi on a corporate account or credit card over the phone for at least a decade.

I'm not sure that the ride-share concept is going to work once it expands - the "kindness-of-strangers" business model is prone to a few bad apples spoiling the whole barrel. It seems to me like the city authorities, taxi drivers' associations and tech entrepreneurs should get together and map out how the cab service could be improved for everyone.

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount. The insurance requirement is also there to protect the passenger. This has a fun, easy-going feel, but I'm not sure that should really trump safety and fraud prevention.

Government simply has no compelling justification to use force (the threat of fines and/or imprisonment) to prevent an adult from contracting with another adult to do something which would otherwise be legal were money not involved. There are always well-intentioned excuses for such government intrusion on basic rights, such as fraud prevention--but fraud is already illegal, such laws already serve as a reasonable enough deterrent to prevent most of it, and the voluntary rating and reputation systems which "ride-sharing" communities use are excellent and less-intrusive ways to be proactive with the same issues professional licensing has traditionally tackled.

There can even be professional organizations which offer voluntary licensing, inspections, etc., to which companies or individuals could choose to submit for the purpose of gaining a recognized accreditation. Government need not mandate it; the market would provide for such a thing because some customers would find it an added value.

Quote:

Not to mention preventing various forms of discrimination (whether not picking up certain people, or not providing services to certain areas e.g. black neighborhoods).

The idea that no one would ever serve minority communities if not for government mandates requiring it is a strangely common fixation, and a very mistaken one. Many of the reasons why this is the case are tackled in this nice little article:

Even in then worst of times, when minority communities were pervasively discriminated against and systematically underserved, free markets allowed them to develop ways to serve themselves--e.g., Motown records, and the many Jewish institutions which developed and were at the cutting edge of economics, politics, and technology for centuries because of discrimination against them. When government decides to get involved, however, it's more often to do harm rather than good--for example "separate but equal" Jim Crow laws which worsened and codified what had been informal discrimination into formal law.

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The counterargument is that regulation also serves to maintain rates at a certain level, and that may not be good for consumers. But I don't think this is the best solution, especially given that part of why they are undercutting the competition is by cutting corners on licensing, vehicle maintenance, and employee pay and benefits (since basically they are getting a large number of part-timers to do the work).

It's not a legitimate role of government to create artificial scarcities and barriers to entry, even if the goal is artificially increasing wages and benefits--because government can only do so by violating one party's basic rights in order to enrich another party. That's bad enough, but then government licensing mandates for things as basic as sharing transportation or the like always lag behind the times when disruptive technologies develop and prop up old, inefficient industries at a great cost to their forced-to-keep-using-them customers.

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Last point, undercut taxi services this way, who is going to provide taxi services in the middle of the night? Is Lyft going to get volunteers for those shifts too?

There will always be a need for actual taxi and/or similar professional services for just this reason. We'd just need fewer of them overall, and they'd specialize in these high-demand times. The market adjusts to serve whatever conditions in which it finds itself--that's one of the advantages of having a free market: it's flexible to changing circumstances.

Except that many people in our society are willing to trade some freedoms for a safer life. This is not always a bad thing as you make it out to be.

Do you think the FDA should be abolished? I mean any adult should be able to pay any other adult for any old food and any old drug he cares to sell right? Regardless of whether the food if tainted or the drugs are safe. We give up a little bit of freedom for safer food and medicine. There are reasons for the current regulation of taxis.

Regulations on things which are inherently dangerous to other people are understandable; regulations on things which are only dangerous when misused (isn't everything?), and/or are only dangerous to ourselves, are unjustifiable. The legitimate purpose of government is to protect individual rights, not to strip them away.

Regulations are there to protect citizens against opague risks - i.e. risks that the citizen can't reasonably be expected to learn about on their own because doing so would consume inordinate amounts of time.It's the same reason you aren't expected to research if the food you eat is safe - instead you have goverment agencies like the USDA who make sure your fruit isn't poisonous.

Regulation of taxi-service is no different. It makes sure taxis are safe, without you having to manually inspect every vehicle (and have the necessary mechanical knowledge to do so) to insure its safety, check up on insurance and driver qualification etc.

It may be different in the US, but in Denmark for instance, the taxi-driver license is more stringent than the normal license, since you are transporting other people around and are responsible for their safety. (That you still encounter taxi-drivers who drive like they have a deathwish is another matter).

Then there's the issue of insuring that there is adequate service at all times. Being able to cherry-pick the most profitable times of day to do business makes you more competitive, true, but if normal taxi-services were allowed to do so, there would definitely be a reduced quality of service.

In your unregulated world this would mean that you couldn't rely on taxis as an option, and that would negate the value. You would essentially still need to have an alternative on hand, like owning a car. And in that case, why ever use a taxi?

The UK model works well, as others have said.Getting a minicab license seems pretty easy, while hackney carriages (essentially a USA-style taxi) are much more regulated.There's a lot of rivalry between the two, since taxi ranks outside airports and train/bus stations are often restricted to hackney carriages. Minicabs must theoretically be pre-booked, but you can normally flag one down like a hackney carriage.

I have to ask about your insurance though. Mine specifically prevents me from transporting a passenger for commercial/monetary gain. This 'ride share' would fail the insurance company's duck test, even if the police/authorities turn a blind eye. The fact that Lyft is a profit-making company would be enough to make it's sevices count as commercial (IANAL, etc.).I know from speaking to minicab drivers, that getting an insurance company to remove the "not for commercial gain" clause is expensive (at least 5x the normal insurance cost!).

Why do I get the feeling that this would only ever work in San Francisco? I can't imagine the citizens of NY or London ever signing up for a scheme that puts them in close proximity (never mind direct conversation) with strangers.

Regulations on things which are inherently dangerous to other people are understandable; regulations on things which are only dangerous when misused (isn't everything?), and/or are only dangerous to ourselves, are unjustifiable. The legitimate purpose of government is to protect individual rights, not to strip them away.

Yes, and carrying people around in a few tons of metal at instant-death speeds is inherently dangerous and something that needs to be regulated, both for the passengers and the people outside the car.

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bunch of zomg government baaaaaaaaad freedom for alllll bs

Put your money where your mouth is and move somewhere with all this "freedom", there are plenty of less developed countries out there where you can do what you want. But you won't, you'll remain a keyboard warrior in the safety of your regulated society, raging against The Man until something happens to you and yours and suddenly reality will kick in, rather than freshman level anti-government rhetoric.

Nobody should be banned from driving others, whether for pay or not. Or should car-pooling be banned? When I went to summer camp as a kid, some counselors volunteered to drive campers for a small stipend. They drove their own cars, not at all regulated under taxi laws. Should that have been banned, so that I wouldn't have been able to get to camp, in the name of safety?

MyGaffer wrote:

Do you think the FDA should be abolished? I mean any adult should be able to pay any other adult for any old food and any old drug he cares to sell right? Regardless of whether the food if tainted or the drugs are safe. We give up a little bit of freedom for safer food and medicine. There are reasons for the current regulation of taxis.

The FDA certainly should not have the authority to ban. It should test, mandate labeling of ingredients and safety hazards, etc. but my body and mind are my most personal possessions, and my right to put what I want in my body is essentially absolute.

Regulations are there to protect citizens against opague risks - i.e. risks that the citizen can't reasonably be expected to learn about on their own because doing so would consume inordinate amounts of time.It's the same reason you aren't expected to research if the food you eat is safe - instead you have goverment agencies like the USDA who make sure your fruit isn't poisonous.

Regulation of taxi-service is no different. It makes sure taxis are safe, without you having to manually inspect every vehicle (and have the necessary mechanical knowledge to do so) to insure its safety, check up on insurance and driver qualification etc.

It may be different in the US, but in Denmark for instance, the taxi-driver license is more stringent than the normal license, since you are transporting other people around and are responsible for their safety. (That you still encounter taxi-drivers who drive like they have a deathwish is another matter).

Everyone willingly lets friends drive them around. People don't inspect their friends' cars for safety or expect their friends to be certified as exceptionally safe drivers. This seems like a non-issue.

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Then there's the issue of insuring that there is adequate service at all times. Being able to cherry-pick the most profitable times of day to do business makes you more competitive, true, but if normal taxi-services were allowed to do so, there would definitely be a reduced quality of service.

Except that market forces would ensure that service is proportionate to demand. It means increased service when there's increased demand, which isn't the case and is a problem even in NYC. It also means prices and CO2 emissions would go down because cabs wouldn't spend so much time cruising around looking for passengers at off hours.

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In your unregulated world this would mean that you couldn't rely on taxis as an option, and that would negate the value. You would essentially still need to have an alternative on hand, like owning a car. And in that case, why ever use a taxi?

On the contrary - taxis would be cheaper, more readily available, and more flexible (as numerous individuals and startups would offer different types of service tailored for different needs, such as carpooling to work between cities for pay).

I don't get it. Taxi service in San Fran is bad; OK. So instead of not being able to find a taxi, you jump in your own car and act just LIKE a taxi but call it a rideshare (even though you have no idea who you are picking up or where you are going...hmm smells like a taxi).

I would imagine a true rideshare would be more like a craigslist of destinations, and if you find one that matches you could ride together. This just sounds like the San Fran government can't properly run a taxi service (gasp!) and that the common citizenry has to find half-assed solutions.

Get used to that California; 3 major cities already went completely belly up, and more to follow.

Everyone willingly lets friends drive them around. People don't inspect their friends' cars for safety or expect their friends to be certified as exceptionally safe drivers. This seems like a non-issue.

that doesnt raelly make sense... you already trust that person so you dont need a 3rd party to check things like driving ability, insurance etc.

It is the same reason I would lend a friend £10, but not to a complete stranger...

I am a Brit, but spent some time in moscow and interesting to note they have a very effective "private taxi" mechanism which is left over from the Soviet era - at any place you just stick your hand out and someone will stop and then you haggle a bit and off you go - it is widely used and accepted even though to me it seemed like an odd (and rather terrifying) system! Obviously not one that is easily used without good Russian language skills!

Everyone willingly lets friends drive them around. People don't inspect their friends' cars for safety or expect their friends to be certified as exceptionally safe drivers. This seems like a non-issue.

Private cars don't do anywhere near the amount of kilometres a taxi would, even a temporary one like these.

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Except that market forces would ensure that service is proportionate to demand. It means increased service when there's increased demand, which isn't the case and is a problem even in NYC. It also means prices and CO2 emissions would go down because cabs wouldn't spend so much time cruising around looking for passengers at off hours.

Wrong. Everyone would do things like take all the holidays off, or avoid late shifts and nobody would ever get a taxi. It's bad enough in regulated taxi markets on the big nights like NYE and so forth. And everyone would skip all the routes that lose you money, like one way trips to longer distances, or simply not answer any calls. I don't know how it is everywhere, but in Australia the license to run a taxi costs a lot of money, and you need to actually RUN a taxi, you can't decide not to have your car on the road. There needs to be enough vehicles out there to support the population, and you can't pick and choose the cushy jobs and ignore the low profit ones.

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On the contrary - taxis would be cheaper, more readily available, and more flexible (as numerous individuals and startups would offer different types of service tailored for different needs, such as carpooling to work between cities for pay).

Nope, this is a fallacy. These half-assed services only can exist by relying on the regulated services to cover the rest of the market.